Seoul to Lift Key Import Tariffs to Stabilize Prices

Seoul to Lift Key Import Tariffs to Stabilize Prices
(Yonhap News – Yoo Cheong-mo)

South Korea's government Thursday announced an emergency decision to lift import tariffs on 70 price-sensitive products, including wheat, corn, syrup, soybean cake and coffee cream, effective April 1, as part of its effort to stabilize local consumer prices amid soaring international prices of raw materials.

The government also unveiled a plan to freeze almost all public utility rates, including public transportation fees, and tap water charges, through consultations with provincial governments and public corporations to help tame inflation.

In addition, the government decided to increase the weekly output of aluminum, copper, nickel and other nonferrous metals by about 40% to 4,800 tons.

The package of emergency inflation-taming measures was announced after President Lee Myung-bak presided over an early morning meeting of economy-related ministers at the presidential office Cheong Wa Dae.

"Lee and economic ministers expressed concern over soaring global prices of oil and other raw materials during the two-hour meeting and agreed to file a list of 50 major products for intensive inflationary oversight," said presidential spokesperson Lee Dong-kwan.

"As part of the anti-inflationary steps, the government will lower or eliminate import quota tariffs for a total of 82 items in the categories of grains, raw materials and agricultural and petrochemical goods. Notably, the government will eliminate import tariffs on 90%, or 70, of the concerned products, effective April 1," he said.

He explained the 50 intensively monitored products will be daily necessities mostly consumed by households in the bottom 40% income bracket.

In this regard, a high-ranking government official told reporters that rice, pork, cabbage, radish, garlic, egg, milk and ramyon will be among the 50 products to be heavily monitored for price increases.

The official noted that the government will no longer be able to unilaterally push for price controls and thus will pursue market-friendly measures through the diversification of import sources and utilization of alternative goods.

Notably, President Lee has steadily paid strong attention to the rising prices of ramyon, a cheap substitute food that is particularly popular among low-income households.

"The freeze of public utility rates will be enforced through the rationalizing of public corporation management and fiscal assistance to provincial governments. Law enforcement authorities will also toughen the crackdown on price-rigging," said presidential spokesperson Lee.

The spokesperson said other anti-inflationary measures would include an overhaul of distribution channels of agricultural and livestock products and the provision of low-interest loans to low income households incapable of coping with rising housing rents.

Meanwhile, President Lee also expressed concern over South Korea's swelling tourism sector deficit, which has reached US$15 billion annually, including $5 billion won spent to educate Korean students abroad, according to the spokesperson.

"The president instructed his Cabinet to devise policy measures to divert Korean travelers' overseas consumption into domestic consumption," said the spokesperson.